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Overcoming the Mikado Situation

2014; Wiley; Volume: 5; Issue: s1 Linguagem: Inglês

10.1111/1758-5899.12165

1758-5899

Ernst Ulrich von Weizsäcker,

Advances in Oncology and Radiotherapy

Our estimates of energy demand are built upon false beliefs in physics. The history of energy concentrates on the history of energy supply. In contrast, this article is about energy demand. A real revolution in global energy demand has taken place over the last 60 years, essentially reflecting a steep rise in energy consumption. Over the last 200 years, we have seen four declines in resource and commodity prices, including energy, the steepest of which took place over the last 60 years. This is not on everyone's mind. Though people believe that energy becomes more expensive every day, the opposite is true. This belief has been the trigger for an absurd increase in energy supply. Because people are concerned about affordable energy, meaning cheap energy, the discussion centres on a further rise in demand and our obligation to meet this demand. Therefore, I may have a hard time persuading the public that an attractive alternative exists to first reduce the rise in demand, and ultimately reduce demand itself. I have five arguments to try and persuade you that this reduction is in fact possible. The first is based on a problem of physics. If you had a 10kg weight, how much energy would you need to lift that weight from sea level to the top of Mount Everest? When I asked my students in America and Germany, the typical answer ranged from 100 to 1000 kilowatt-hours. This is profoundly wrong. It is wrong by a factor of 400–4000.1 In reality, one-quarter of a kilowatt hour would be enough. My point is that our estimates of energy demand are built upon false beliefs in physics. False beliefs! Therefore, a better understanding of physics is needed to finally reach the point Ottmar Edenhofer is describing, a world in which growth can happen with a lot less energy. Second, I argue there are huge business opportunities in energy efficiency – 170 billion US Dollars per year by McKinsey's and General Electric's estimates. My third argument centres on the availability of fossil fuels. Geologically much fossil fuel remains untapped. But it does not need to be cheap. For example, the shale gas hype looks to be petering out quite quickly.2 This is the case with the biggest current unconventional fossil fuels reserve, the Bakken oil and gas field. It may go down in history as a flash in the pan. And of course, fourth, the issue of climate change is not going away. As you can see in the graph of the CO2 and temperature correlation sea level and temperature are closely related. A doubling of CO2 emissions would result in a 50-meter rise in sea level. The difference in sea level may lead to undesired changes in coastlines. Some unpleasant signs are already visible today. In June 2013, we witnessed climate induced floods all over the world. But climate negotiations are in a stalemate because delegations won't agree on penalizing free riders. Free riders are generally very powerful and will nearly always be in the political majority. But maybe at the end of reading this article you will have some hope that perhaps something can be changed. My fifth point (on which I have been working over the last 20 years, in particular at the Wuppertal Institute for Climate, Environment, and Energy), is to submit that a five-fold increase in resource productivity is available in terms of technology and physics. The question is then why does climate diplomacy stagnate, including in Warsaw? The reason is simple: GDP so far correlates with CO2 intensity. And no one wants to reduce economic growth. This is the ‘mikado situation’; people believe they will lose if they make the first move of reducing CO2 intensity. The core of the solution has to include the Kuznets curve of de-carbonization: we are all familiar with the Kuznets curve for local pollution.3 Countries start poor and clean. Then they industrialize and become rich and dirty. But then, surprise, surprise, they manage to decouple environmental degradation from economic growth, ending up rich and clean. For example, 40 years ago Germany was very dirty; now it is reasonably clean. The strategy for that Kuznets curve has been to first become rich before addressing issues of pollution and the environment. This is, of course, the rhetoric we hear from the developing countries. They also say it with regard to carbon intensity. If the world would follow this logic, it would sound unavoidable that we run into a hopeless climate situation. Simply following the Kuznets curve of decarbonisation is not good enough; if six billion people climb the dirty hill of highest carbon intensity before seriously reducing the carbon content of their economies, it will be too late for the environment. Therefore, we must persuade developing countries to do otherwise, and help them tunnel through the curve. If we can achieve all that, the mikado situation will be replaced by what the business community knows as the first-mover advantage. However, we must first create a framework in which the first-mover advantage can occur for those who reduce carbon intensity. Many of my friends consider renewable energies to be the answer to the challenges of climate change and dwindling fossil fuels. They tend to ignore energy efficiency; I beg to differ. The EU has a commitment to reach 20 per cent renewables by 2020. Let us assume that in addition to half a billion Europeans, half a billion citizens of other Organisation for Economic Co-operation and Development countries also reach 20 per cent by 2020. What can be reached by the 20 per cent goal? The answer is 1/35th of the global challenge because 20 per cent is one-fifth of 100, and one billion is one-seventh of 7 billion. Just imagine a 35-fold increase in palm oil plantations or maize fields; it is an ecological nightmare. The same with hydropower; last year I attended the Alps Conference in Graubünden, Switzerland. The mountaineering clubs demanded no additional kilowatt-hours of hydropower from the Alps due to the irreparable damage it would cause. Of course, wind, solar photovoltaic and concentrated solar energy could be expanded. But at a 35-fold increase even these benign sources of energy run into ecological problems. A five-fold increase in resource productivity is available in terms of technology and physics. What is needed in any case is investments in storage and transmission technologies. The real revolution, I suggest, lies in energy efficiency and a massive reduction in energy demand. Achieving ambitious increases efficiency means nothing less than creating a new Kondratiev cycle, one of those large techno-economic cycles of which we had five so far since the times of James Watt. The new cycle would be characterized by at least a five-fold increase of resource productivity. Initial successes can be marvelled at today: Volkswagen developed the XL1 car a couple of years ago. Needing only 0.9 litres of fuel per 100 km it is five times better than today's car fleet. Passive houses are another positive German example. My family and I live in a passive house and the issue of fuel and heating costs has disappeared from our family discussions. I wish everyone in Europe and in the world could have their heating costs disappear as well. Portland cement is a dinosaur technology; why not replace lime stone with geopolymers, such as slag from iron production or fly ash from coal power plants, as feedstock of cement? Energy demand would shrink by two-thirds; even in steel production you can gain a sizeable factor in energy efficiency, but it is not possible to go into detail here (von Weizsäcker et al., 2009). Consuming a little less beef and a little more organic, local, seasonal food could also reduce demand and increase efficiency by a factor of five. The same can be said of transitioning from car-centred cities to human-centred cities. Copenhagen has made a commitment to become climate neutral by 2025. I live near Freiburg in a city called Vauban in which four out of five families do not own a car, not because they are too poor but because they consider a car an absurd solution to their mobility needs; it can be done. Comparing a map of Atlanta, Georgia to a map of Barcelona, the two cities have the same number of inhabitants, but Atlanta is 25 times larger. Imagine you are in charge of organizing public transport in Atlanta. You are dead on arrival, as they say. Strawberry yogurt logistics: at the Wuppertal Institute Stephanie Boege conducted a study mapping the logistics necessary to create one strawberry yogurt. It is outrageous. In Europe, lorries criss-cross 8,000km before a strawberry yogurt can end up on your breakfast table. This can no doubt be reduced. Aluminium made from bauxite should be replaced to the extent possible by scrap aluminium, needing ten times less energy. With the help of a great Australian team, I have outlined all of the relevant sectors in which technological progress can be made. A factor of five is available now, but it is not profitable. Under today's conditions, resource productivity is simply not lucrative. As a result, energy and resource consumption keeps rising, partly because of the rebound effect: energy intensity goes down, and energy consumption goes up. But please remember this point: prices do matter. This gives us a clue on how to beat the Jevons paradox. Nonetheless, we also need to understand the concept of sufficiency, or knowing when enough is enough. That is a matter for our civilization. Does that mean we are all doomed to a miserable life? Not at all – sufficiency can be chic and sexy. Now a few words on policy: tradable permits, command and control structures and direct pricing are all possible mechanisms to achieve the factor of five in improving efficiency. After the turmoil with the European CO2 trading system, we are all a little disillusioned with tradable permits. It is still a good idea but it must be implemented correctly. Also command and control interventions can be quite bureaucratic and inefficient. The most elegant approach is to let prices speak, meaning direct pricing, while avoiding capital destruction and social injustice. When I was on the China Council, I introduced a direct pricing proposal of raising energy prices annually in proportion with the average improvement of energy efficiency, so that monthly energy bills would – on average – remain stable. My Chinese partners loved the idea. This is the benign paradigm I am suggesting. The increase in labour productivity over 150 years has always risen in parallel to wages: a rise in productivity resulted in higher wages, and higher wages created a stronger incentive to rationalise labour. This ‘ping-pong’ increase in wages and productivity continued until a 20-fold increase in labour productivity was reached – an achievement old Karl Marx would not have dared to dream of. The important part of this process is the price signal. Without a price signal we stagnate. The new energy price game of ping-pong is defined by its steady increase. I imagine a five-fold improvement in 40 years and ten-fold in 100 years. To avoid social hardship and deindustrialisation, two conditions should be considered: lifeline tariffs, as implemented in South Africa, and recyclable energy taxes to vulnerable industries to prevent emigration of industry. The latter is exactly what was achieved with Sweden's air pollution tax over 20 years ago. When the hefty tax was first announced, leaders in industry declared they would have to move their business elsewhere so as not to loose out to competitors in India and Germany. The Swedish government responded that industry would receive its money back on a per-value added basis rather than on a per pollution basis. It worked. Nobody emigrated and Swedish industry modernised. We can do the same for energy across the board. Finally, we must reduce the absurd amounts going to subsidising resource consumption. Clearly, I am not expecting the paradigm shift to happen very soon. Nonetheless, the five arguments I have offered may become widely accepted by 2020, at least in intellectual circles. That, I am sure, will help change the environment for a better climate policy and overcome the current mikado situation. Ernst Ulrich von Weizsäcker is Co-Chair, International Resource Panel (UNEP) and Co-President of The Club of Rome (Emmendingen, Germany).